Bookmark/Search this post

After Alice fell down the rabbit hole, nothing made sense anymore. A new logic reigned, and she had to adapt to it as readily as she could. Talking cats that disappeared except for their grin, caterpillars perched on magic mushrooms, and other oddities had to be encountered and dealt with.

Similarly, we find ourselves suddenly confronted with a fantastical menagerie. Such as the formerly inconsequential Greek interparty political wrestling matches becoming of critical importance to the fate of the entire world banking system, stock markets mainly discounting the likelihood and size of the next round of magic money-printing, a world that has decided Spain’s 6% deficit matters a lot while the US’s 8% deficit doesn’t matter at all, untrustworthy institutions that just abscond with client money without charge, and stock markets that are now mostly in the hands of robot machines trading in sub-millisecond cycles.

The signs of distress are obvious. The old forms of logic no longer work and the new logic cannot be traded reliably, as it owes its direction to pulses of fresh money and gyrating sentiment. All asset classes trade in lockstep, with nowhere to run and nowhere to hide. It’s either risk on or risk off, and knowing which might prevail at any given moment is now a 24/7 occupation, and a risky one at that.

The entire stock market is now simply living off of expectations of the future quantitative easing (QE) efforts, with another decision or announcement expected tomorrow at 2:15 EST.

This is the world we live in now, and hardly anybody even questions it anymore.